The vast majority of businesses employ workers from EU countries when they are the best or only available candidates, rather than deliberately seeking to fill vacancies with migrant workers, according to a new Migration Advisory Committee (MAC) interim report on workers from the European Economic Area (EEA).
Finding that “employers in all sectors are concerned about the prospects of future restrictions on EEA migration” in the light of Britain leaving the EU, the report, and responses to it, expressed fears that tighter migration rules would harm UK business, and emphasised the need for ease of access to EU workers.
The MAC was commissioned by the British government last July to report on current and likely future patterns of EEA migration and assess its impact on the UK labour market.
Its initial report, EEA workers in the UK labour market: interim update, published on Tuesday (27 March), outlined the reasons employers cited for employing EEA migrants, and what might happen if a more restrictive migration policy was introduced.
Its evidence base will help design Britain’s new migration system after the transition period for exiting the EU ends at the turn of 2021, and also considers the regional impact of migration.
Employer responses on EEA workers indicated that “lower migration would very likely lead to lower growth in total employment, and lower output growth”.
EEA migrants were more likely to work evenings or nights, work that might be thought less appealing, according to employers, adding that EEA migrants were “better educated than their UK-born counterparts”.
Some employers, particularly in lower-skilled sectors, felt their businesses had an “image problem” among UK-born workers, as jobs in their sector were viewed as unattractive careers.
The report also found that while employers denied that low wages contributed to this image problem, their response was unconvincing given that 95 per cent of jobs in hospitality paid below-average hourly earnings.
“When discussing the reasons EEA migrants rather than UK-born workers are sometimes hired, it was noticeable that employers did not often mention wages as a factor,” the report stated.
EEA workers’ greater motivation to work was also a factor. Employers did not think of themselves as employing EEA migrants because they were cheaper – insisting they paid the same wages to workers doing the same job, regardless of nationality – “but because EEA workers are higher quality or are prepared to do work that British workers are not”, it added.
The independent advisory body, explaining UK business and industry leaders’ concerns about the impact on the labour market, said the expansion of the EU in 2004 saw changes to the quality and volume of EEA migration, and led to a rise in employment.
After 2004, employers – especially in lower-skilled sectors – found they now had, through free movement, access to a new, well-qualified and highly motivated labour force, which helped employment grow.
Workers from the older member states were, and still are, more likely to work in high-skilled jobs than UK-born individuals, the MAC found.
It added that training UK-born workers to fill skills shortages may be a strategy in the longer term, but employers stated that in the short term they needed EEA migrants to fill the gap, and the availability of EEA migrants had not reduced training opportunities for British workers.
The MAC confirmed that high-skilled employers fear EEA workers being subjected to the current non-EEA visa system, which “they do not hold in high regard”, while lower-skilled employers were worried that the restrictions would fall hardest on them.
Plans for restrictions are “likely to be opposed by many employers” because of increasing costs and bureaucracy.
The report highlighted the need for low-skilled migration route for EU workers, said Gerwyn Davies, the CIPD’s senior labour market analyst.
Lauding the MAC’s “rational, evidence-based interim report”, he said it rightly concluded that UK employers fill vacancies with EEA migrants for various reasons – including the unattractiveness of the role, and the local unemployment rate among lower or unskilled roles.
This made it imperative for “some form of low-skilled route for EU migrant workers in the UK in the medium to long term”, Davies said.
He suggested that the report mirrored the CIPD’s research, which found that business could do more to fill roles in “slow-skilled or unskilled sectors”, advocating a ‘labour shortage occupation list’ where employers would have to prove their efforts to improve the supply of British workers.
Neil Carberry, CBI managing director of people, agreed the report “rightly” highlighted employers' concerns regarding future access to skills and labour “from our largest and closest trading partner”.
Although firms recognised that “freedom of movement as we know it will end, restricting access to EU workers – at a time of record employment rates – would leave companies without the staff they need to grow and invest”, he said.
If Britain is to continue competing globally, it will “need to take an open approach to migration, with appropriate controls to maintain public support”, he added.
Applying non-EU rules to “citizens from our closest trading partner would be disastrous for the economy, with smaller companies hit hardest”.
The British business body shared a widely voiced response that EU migration had had a “positive impact on the UK economy” – with job creation and economic growth helping to pay for public services such as roads, schools and hospitals.
“We hope the government uses this evidence in designing a new system that shows Britain remains open to the world," Carberry added.
Commentators noted that ideas about the social and economic effects of immigration were an influential force in the 2016 British EU referendum.
Tom Hadley, the Recruitment & Employment Confederation’s policy head, said there had emerged a strong collective employer voice on the need to maintain access to staff and skills from other EU countries – for low-skilled as well as high-skilled roles.
“It’s important that the debate isn’t just about engineers and doctors, but acknowledges that we need people to pick our fruit and veg, cook and serve in our hotels and look after people in our care homes,” he said.
Hadley highlighted the report’s recognition of the need to maintain access to seasonal and temporary staff who play a key role in many sectors.
“Our own data, for example, has shown staffing challenges are accelerating across a range of sectors from IT and financial services, through to hospitality, construction and logistics,” he said.
“Employers are already finding it hard to secure the workers they need and we haven’t left the EU yet.
“That’s why the government needs to deliver a post-Brexit immigration system that works for permanent and temporary staffing, is evidence based and is simple and swift to navigate… which doesn’t post undue costs on employers that will damage productivity and economic growth.”
Other industry heads across different sectors welcomed the report’s evidence-based approach and sought future action to maintain a future supply of talent.
Angela Coleshill, the Food and Drink Federation’s competitiveness director, said UK businesses were “rightly worried about what a future migration system might look like once we’ve left the European Union, and the final report must fully address these concerns”.
It was vital that the MAC provided an evidence-based solution that supported “the continued growth of the UK’s largest manufacturing sector and enables us to feed the nation”, she said.
Coleshill echoed other industry chiefs who have said the food industry, among others, had already faced a skills gap for some time: “Food and drink manufacturing will require 140,000 new workers by 2024 to meet the needs of a growing sector requiring more highly technical skills and to manage demographic change. We need to be able to attract talent to ensure we remain a world-leading sector.”
Being unable to plan in advance for Britain’s exit had taken its toll on UK business, she added: “Food and drink manufacturers will often plan their workforce needs more than a year in advance and will need to know what the future immigration system will look like to begin preparing.
“Short term, the government must move swiftly to set up the new registration system and provide clear guidance to workers and businesses so that our valued EU workforce and those arriving during transition have the security they need.”
The MAC’s initial findings were based on evidence received from more than 400 businesses and industry bodies. It did not make any policy recommendations.
A Home Office spokesperson said a future migration system would be based on evidence, including from the MAC, and on engagement with a range of stakeholders, including businesses, universities, the devolved administrations and NHS leaders.
“We welcome the MAC’s interim report and will consider its evidence in full when it publishes its final report in September.”
However, although a transitional deal has been agreed to continue free movement of workers until the end of December 2020, MPs have not clarified the system that will replace these rules after that date. The report noted that many employers were underprepared for any change.